Finally, some predictions and foresees related to ‘Crypto Currency’ seem to be coming true. For this particular matter, Finance Minister Nirmala Sitharaman must be praised as she always kept distance from the Crypto Currency. India has always made its stand clear on ‘Crypto’. On the other hand, the so-called Economists are now silent who were advising to allow crypto in the country saying that it’s crucial to be with the world’s inclination over new economic transaction medium.
Crypto Currency’s world’s second largest trading platform ‘Future Exchange -FTX’ filed for bankruptcy and plunged the whole crypto market in a big chaos. FTX began 2022 as the world’s third largest crypto exchange with its valuation over $32 billion. This recalls the early recollection of Lehman Brothers’ collapse which then led to the world economic crisis in 2008. Shining precipitously on the platform of world economics, the founder of FTX, Sam Bankman-Fried (SBF) is hit by a big drawback. World’s second largest crypto exchange not only went bankrupt but it squandered a large amount of money of million of investors.
One of the biggest competitor of the world’s biggest crypto exchange, ‘Binance’ is also astonished by seeing the collapse of FTX. FTX became so heavy because of SoftBank, Sequoia Capital, Temasek and Investors. It touched the amount of $2 billion in its daily transactions with 1.2 million registered users across its platform. But now everything is destroyed as the company is incapable of repaying to the investors and is so going ‘bankrupt’.
Born in 1992, Bankman-Fried’s net worth is estimated around $26 billion. He once boasted that though my exchange is today at the position at number two in the world but when I shall be in the number one position then I will buy companies like Goldman Sachs and CME group. Today Bankman’s moon shine palace of fantasy is grounded.
FTX was earning in terms of commission from both buyer & seller sides. In the inception, Alameda Research was formed and after that FTX started. Alameda is a hedge fund run by FTX’s founder Bankman. Problem started while on November 2, CoinDesk reported on a leaked balance sheet from Alameda Research and the investors got tensed. People could know that Alameda is under debt. A hedge fund holding a large amount of one asset led the crypto market & investors to raise questions about the relationship between FTX and Alameda.
Bankman-Fried’s tweet caused a difficulty for him. Giant Crypto exchange Binance’s CEO Changpeng Zhao (CZ) and FTX’s Bankman were good friends. Since its inception Zhao invested $100 Million in FTX. After some time, these good friends of the near past are seen fighting over social media! Analysts warned of a collapse and these developments had traders scrambling to liquidate their FTT tokens. While depositors start withdrawing money from the bank altogether then the bank becomes helpless. We have seen cases of Yes Bank, PMC Bank and many other cooperative banks. Withdrawal requests amounted to over $6 billion, and data showed that stable coin outflows on FTX reached $451 million over seven days on November 7.
Just a day after claiming that FTX is fine, Bankman-Fried announced that FTX is facing a liquidity crunch and is selling his company to Binance whereas on November 9 Binance pulled out of the deal. The websites of FTX Ventures and Alameda Research went dark and ridiculously Bankman called on investors for $8 billion in emergency funding to overcome the crisis.
In the aftermath, the whole crypto market rocked and the Bitcoin prices plummeted to a multi-year low of $15,600. FTT itself dropped to $1.3. BTC exchange outflows hit a historic high of 106,000 BTC per month. Subsequently, Binance and other exchanges including OKX, Kucoin, Huobi, Bitfinex and Crypto.com have committed to issuing a proof-of-reserves attestation in the coming days.
Bankman’s name is well known as the second biggest individual donor to USA’s Democratic Party but is not owing to paying his creditors in a range of $10 – $50 billion who are around 1 million or even more.
Investors are running away from Crypto. Crypto Currency LUNA turned out to be ZERO was not so old example for investors to be aware and alert. Getting richer through shortcuts is not a sustainable way, this new lesson is included into the investor’s syllabus with a chapter of FTX. On the other side it’s also a lesson for young business tycoons who are hardly patient but bilious in nature mostly. SBF could have managed the situation well but instead he couldn’t even last his good bonding with CZ and his all negative tweets or say short Temperedness caused the chaos & crisis not only for/in his company but brought disaster in the entire Crypto community. In the finance industry as of now Bankman is that sun who arose and set so abruptly. But yes, zeal, passion and right direction can turn him into a Phoenix as well if he has learnt something.